A year after proposed merger talks with Henry Ford Health System collapsed, Beaumont Health System agrees to combine operations with two other Detroit-area providers.
It was little more than a year ago — May 2013— that Detroit's Beaumont Health System and Henry Ford Health System abruptly announced that they had called off talks to form an integrated system.
Senior leaders at both health systems declined to comment on what scotched the $6.4 billion marriage that just seven months prior Henry Ford CEO Nancy Schlichting had described as "the absolute ideal partner for us."
Some observers said the sticking points centered around the disparate populations the two systems serve, and their diametrically opposite physician compensation models. Henry Ford uses salaries and capitated systems and Beaumont relies mostly on independent physicians and fee-for-service.
Others noted cultural hurdles between the two systems that could not be overcome.
Flash forward to June 2014, and the announcement that Beaumont, Botsford Health Care and Oakwood Healthcare had agreed "to combine their operations" into a $3.8 billion healthcare organization that will be called Beaumont Health, with Beaumont President/CEO Gene Michalski serving as its CEO.
Marianne Udow-Phillips, director of the University of Michigan's Center for Healthcare Research & Transformation, says this deal "has a better chance than Henry Ford because the cultures are much more similar and now they have gotten much further down the road. They have the support of their physicians and that is the key."
Why did the Henry Ford talks collapse?
"Henry Ford is a salaried physician model and has a very longstanding closed network practice that built a very successful health maintenance organization and has that sort of mindset. Beaumont is an independent practice model and the physicians are paid predominantly fee for service," Udow-Phillips says.
"Those two fundamental issues were very important in what made it very difficult for them to come together in a merger."
"In addition to that you have a geographic issue where Henry Ford, even though they have a location in Oakland County, it has been very strongly anchored in Detroit, and you have Beaumont very strongly anchored in a wealthy suburb of Detroit," she says.
So why will this effort "to combine their operations" (the three systems have avoided the "M" word) work with Botsford and Oakwood?
"These hospitals have a more similar profile. All of the physicians are predominantly fee for service and independent practice. There are some employed physicians but not the majority," Udow-Phillips says.
"And they're in the suburbs of Detroit: Dearborn for Oakwood; Farmington Hills for Botsford; and Oakland County for Beaumont. So they form a ring around Detroit. They have a little bit more similar profile in terms of the type of patient populations they are serving."
Another Culture Clash Unlikely Allan Baumgarten, a veteran observer of the shifting hospital landscape across the Midwest, agrees that a culture clash is unlikely now that key stumbling blocks have been removed.
"There were other disagreements about who would lead the combined organization and would the combined organization maintain two academic medical centers (Beaumont started a medical school with a local university a few years ago)," Baumgarten said in an email exchange.
"Clearly these parties have agreed that the Beaumont brand is more valuable than Oakwood or Botsford."
As for changing the care delivery landscape, Baumgarten provided this analysis:
"Based on revenues in 2012, the combined system will have 30% of the hospital market in the three-county Detroit area (Wayne, Oakland and Macomb). That makes them the largest system it what is a relatively unconsolidated market.
Next largest is Henry Ford at 22.8% (Henry Ford just got a credit downgrade over concerns about operating income). I don't think that 30% market share is enough to attract opposition from the (Federal Trade Commission/Department of Justice), although a 40% Beaumont-Ford combination would have gotten closer scrutiny."
Udow-Phillips says the deal will likely face more than a passing glance from the FTC.
"Every merger these days is getting a lot of scrutiny," she says. "In this case there is quite a bit of competition in the marketplace in this region and so I am predicting it will go through with regulatory approval but we can't be 100% sure."
Better Negotiating Ability
Baumgarten says the launch of Beaumont Health comes as hospitals in the Detroit have seen inpatient days drop steadily since 2007. "Even the surge in enrollment in the Medicaid expansion and individual plans is unlikely to change that trend line. That's one reason why I think that the assurances offered of achieving savings with no layoffs may not be very reassuring," he says.
"Further, Medicare and other payers are pressing hospitals to reduce readmissions, linking payments more closely to performance and cost savings. These hospitals are hoping that investments in health IT and care management systems spread over a larger organization and more patients will have a better return."
Udow-Phillips says the deal will give the new Beaumont Health "significant leverage and it increases their negotiating ability with the health plans in the region."
"It probably doesn't change too much from a clinical care perspective," she says. "One would hope that they are better on integration and coordination of care for patients who see physicians in these systems. But I don't think it will change too much of the profile of who is delivering what and where in the region."
Udow-Phillips says the chances are good that Beaumont Health will become a reality by the end of the year, but she warns that "they aren't across the finish line yet."
"We are going to have to wait and see how things play out," she says. "They seem to have settled the CEO issue, at least initially. We have to see what the roles are for the boards and the other leaders of these organizations over time. There is much yet to come on this one, but for right now they seem to be on a pretty good path to success of bringing this together."
The growing importance of population health management and value-based care as well as market share and leverage with payers is spurring much of the trend toward physician hiring.
The shift toward the employed physician model has grown from a stream to a deluge, accounting for more than 90% of new physician job openings at hospitals, medical group, health centers and other healthcare facilities, Merritt Hawkins reports.
The findings were made public Monday in the Irving, TX-based physician recruiters' annual report, which tracked 3,158 physician and advanced practitioner recruiting searches the firm conducted from April, 2013 through March 2014.
Of these assignments, more than nine in 10 featured practices in which newly recruited physicians would be employed. Less than 10% of the recruiting assignments featured independent practice settings, such as partnerships, concierge practices or solo practice settings, down from over 45% in 2004.
Travis Singleton, senior vice president at Merritt Hawkins, says the Patient Protection and Affordable Care Act, with its emphasis on population health and value-based care, and the growing importance of market share and leverage with payers is spurring much of the trend toward physician hiring.
"Everyone has glommed on to the employment model; physicians because they are trying to mitigate risk and they are looking for financial help and they have all the issues of medicine and small business concerns," Singleton says.
"On the other side, whether you are a hospital, urgent care, concierge or some mix thereof, it enables you better to influence the behavior of your clinicians. And increasingly, in all of these delivery systems, that clinician is not just a physician. It's a team health environment… and the only clear mechanism that allows you to push all those different cultures and providers and modalities in one direction is employment."
Despite the persistent grumbling from many physicians about a loss of autonomy as employees, Singleton says the Merritt Hawkins search results paint a different picture.
"This is not a survey where I may catch someone on the wrong day and this is what they want to do or what they are threatening to do. This is what they did in the past year," he says.
"It clearly shows that if you're a newly hired physician or provider, whether you've been practicing for 30 years or you are just out of residency, you have a nine-in-10 chance of taking an employed job. I am hard pressed to see that we are forcing people into that model. You wouldn't see such drastic numbers if that is not what both sides wanted."
Family Docs Remain the Top Search
For the eighth straight year, family physicians and general internists were the top two recruiting requests. Singleton says the demand for primary care physicians comes in large part from their enhanced roles as team care leaders for accountable care organizations and other value-based delivery networks.
"On a singular search the difficultly level for finding primary care physicians is the same as it has been in years past," Singleton says. "Unfortunately we aren't talking about single searches in family practice anymore. Primary care is the name of the game. It may not be an integrated network calling me for one or two docs to fill a void. They're calling for 50 or 100 at once because that is the only way to accomplish their population health goals."
"Primary care compensation never will outstrip specialists. That is not how our system is built," he says.
Singleton says the rise in compensation for primary care doctors "is as much about demand as it is about who is paying them."
"You see this in pediatrics as well. In years past when it was private, smaller groups they could only do so much. Now you have hospitals that have the downstream revenue, inpatient revenue, they are able to be more competitive."
The demand for primary care access has also fueled search requests for nurse practitioners and physician assistants, which increased by 320% over the last two years, Merritt Hawkins reports.
"In simplistic terms you have to preserve access. Being able to give patients the portals to get the right care at the right place by the right person," Singleton says. "Most Americans today are dealing with some sort of health issues: obesity, diabetes, mental health. Our specialists are maxed out. Who can do the coughs, sniffles, and basic care? Some would argue that a nurse practitioner or a physicians assistant is in a better position to give more attention to those types of patients; trying to keep them out of the ED, in other words."
The dire need for primary care access has prompted hospitals and other providers to ignore the territorial sniping between physicians' associations and advanced practice nurses.
"They're saying 'we are not going to wait on scope-of-care arguments. This is my primary care access mission. This is my population health mission. I cannot do this with physicians alone, so I am making the call. We are employing 100 NPs this year,'" he says. "You have to practice at the top of your licenses. You cannot get out of this alone without help."
A notable exception to the shift toward employed physician models is the rise in concierge practice. Merritt Hawkins conducted 32 searches last year, up from 10 searches two years ago. Singleton says his search data probably underreports the move towards concierge services because recruiters often aren't needed.
"If you are a provider who is fed up, whether it's your legal costs or compliance or the business of medicine itself, the easiest shift you could make is to become a concierge physician," he says.
The shift also meshes well with the move toward consumer-driven healthcare. "We are seeing some of the same trends in urgent care and freestanding ERs towards convenience medicine," Singleton says.
"People are coming to understand this consumer-driven, convenience care area of medicine and the push to outpatient care. Concierge is a good reflection of that. Healthcare for so long has been insulated to the consumer. They haven't had to appeal to the consumer like they do now."
Speed Bump for Value-based Care
Merritt Hawkins' report also shows that the move toward value-based physician incentives stalled in the past year. In 2013, 39% of Merritt Hawkins' search assignments offered a production bonus featuring at least one value-based metric such as high patient satisfaction scores or low hospital readmission rates.
In 2014, that number dropped to 24%, which Singleton says indicates that employers are struggling to create physician compensation formulas that incorporate both volume- and value-based metrics.
"They love the idea of going to a value- and outcomes-based compensation model, but we are all struggling with how to accomplish it," he says. "We saw a spike last year and everyone said 'Oh gosh! This is where we are going!' This year we saw a bunch of health systems say 'let's wait until we have a clearer picture of the ACA.'"
Physicians are starting to push back too, Singleton says, but not because they're opposed to value-based compensation.
"People think they are just greedy physicians who want to be paid. Not the case," he says. "Most physicians will tell you this is the right direction for healthcare. They just want a fair formula in place, especially when you look at team-based care and integrated networks, where you have all of these different mechanisms and value components that they are supposed to be judged and paid on. There are some things that we don't know how to adjust yet. And that is what the numbers reflect."
In the coming year, Singleton says he expect providers will continue to adjust value-based compensation while waiting to see how the ACA plays out.
"You are going to see people start to increase what that total compensation affects," he says. "Even last year, when we saw that big spike, we looked at all of these different programs that entered into this value-base and found it only influenced 5% or 10% of the total compensation."
"And we have to have a better roadmap of the ACA to know how we are going to be judged and how the government is going to pay us before we can put a format in place that measures it."
The deal between Banner and the University of Arizona Health Network is designed to improve quality and access to healthcare across the state, while lowering costs through coordinated value-based care.
Banner Health, the University of Arizona, and its affiliated University of Arizona Health Network announced Thursday that they will create a statewide healthcare organization.
The affiliation would generate $1 billion in new capital and academic investments, and would combine more than 37,000 employees, making it the largest private employer in Arizona, according to a joint press release.
Thursday's announcement follows authorizing votes from the boards of directors at UAHN, Banner, and the Arizona Board of Regents. The definitive agreement is expected to be finalized in the third quarter, but it would have to be approved by the three boards.
Banner President and CEO Peter S. Fine said in prepared remarks that the deal, outlined in a Principles of Agreement document, meshes with Banner's "vision… to sustain a position of national leadership. This opportunity to join with a premier academic organization significantly advances Banner towards this vision."
"In addition, we're especially mindful of UAHN's legacy of excellence in Tucson and throughout the state, which must be maintained, nourished and strengthened," Fine said.
Supporters of the new healthcare organization say it would improve quality and access to healthcare across the state, while lowering costs through coordinated value-based care, and population health models that emphasize wellness.
It would also allow the UA Medical Center to expand capabilities for complex academic and clinical programs such as transplants, neurosciences, genomics-driven precision health, geriatrics, and pediatrics while creating investment opportunities in other areas.
On the ledger, the affiliation would improve the finances of UAHN by eliminating persistent shortfalls and low operating margins. This would include eliminating UAHN's $146 million debt burden, providing $21 million for the purchase of land now leased to UAMC, and spending $500 million over the next five years to expand and renovate the medical center and other capital projects, including a multi-specialty outpatient center to be built in Tucson.
Among its many selling points, the deal also:
Creates a $300 million endowment which will provide a $20 million per year revenue stream to advance the UA's clinical and translational research mission.
Preserves historic funding levels between the clinical and academic partners in addition to a $20 million per year enhancement.
Allows additional funding support based on growth in revenues generated by the clinical and academic partnership.
Sustains a relationship with UA, anchored by an academic division within Banner. The UA Medical Center – University and South Campuses and Banner Good Samaritan Medical Center and the faculty practice plan will support the growing needs of the Colleges of Medicine in Phoenix and Tucson and create a value-based delivery system.
"With healthcare here in Arizona and across the nation facing new challenges and opportunities every day, this agreement will allow the Arizona Health Sciences Center and the entire UA to advance our mission to provide education, conduct research and enhance patient care that will transform healthcare at the state and national level," UA President Ann Weaver Hart said in prepared remarks.
Resolute Health Hospital is a test lab for population health that links all providers in Tenet Healthcare's network and the hospital on a single EMR to coordinate care.
Money talks.
Tess Coody-Anders
CEO at Resolute Health Hospital
With that in mind, Tenet Healthcare Corporation is shouting out its $200 million commitment to population health and value-based care with the opening this week of its 128-bed Resolute Health Hospital in New Braunfels, TX.
Resolute Health Hospital is Tenet's 79th hospital, and the 19th in Texas for the Dallas-based chain. Situated on the fast-growing I-35 corridor between San Antonio and Austin, the 365,000-square-foot Resolute Health Hospital has all the amenities that we've come to expect from newly built acute-care hospitals: all private rooms, state-of-the-art HIT, opulent decor, and a range of lucrative service lines including cardiovascular and orthopedics.
It is not so much the capital projects or the 56-acre "wellness campus" that make the Resolute Health Hospital campus so intriguing. It's the strategy behind the investment. Tenet is using Resolute Health Hospital as a test lab for population health that links all providers in the network and the hospital on a single EMR to coordinate care.
Many health systems build their population health models around anchor hospitals, a one-stop shopping strategy modeled somewhat like suburban shopping malls.
Tenet turned that model on its ear and built Resolute Health Hospital around its population health model.
Tess Coody-Anders, CEO at Resolute Health Hospital, says building the hospital was the next-to-last piece of a project on the wellness campus that was part of the design when Tenet launched the pilot nearly four years ago.
"We started with community health and population programs first. Based on what we saw with our health trends, we opened an endocrine and diabetes institute," Coody-Anders told me.
Resolute Health Hospital
Wellness Center to Come "Then we opened two in different communities urgent care centers where we saw information just getting siloed off in the urgent care environment. Then we began adding primary care clinics and, of course, the 200-plus person clinical integration net. And then this week culminated in the opening of the hospital."
The 25,000-square-foot wellness center opens in September, capping the list of capital projects. I asked Coody-Anders why Tenet didn't just build the hospital first, and then build the provider networks around the hospital.
"It is absolutely the most important pole in the tent that we are building an integrated delivery system and we don't want that delivery system to be wholly dependent upon or focused on inpatient acute care revenue or services," she says.
"By beginning our relationship with the people we serve around health and wellness issues, we are able to more clearly communicate to physician partners, business partners, [and] payers, that that was our genuine focus, to move toward a population health environment where we are prepared to be paid for performance and not just what we do to you."
"So, the hospital," says Coody-Anders, "is an incredibly important part of what we are doing. But to be honest, for a while, we even looked at whether or not we needed to build a hospital."
The healthcare landscape has changed a lot in the past four years, and the incremental rollout at the Resolute Health campus gave Tenet the chance to make significant design changes in the hospital along the way.
"In the beginning there was a lot of discussion about lots of beds. We looked at the health trends and the outmigration statistics for the area and we saw that in some cases better than 60% of inpatient services out-migrated to Austin or San Antonio. We realized there was a need for additional acute care beds," she says.
Emphasis on Prevention "Then we modeled out what we wanted to do in the way of prevention and ambulatory services [and] looked at some projections at where things could shift to the outpatient environment in the next 5-10 years. We felt that (128 beds) was a more appropriate level to open at, despite the fact that this area is growing at about 5% a year."
The hospital is designed for vertical expansion and could add as many as 200 beds.
The wellness campus is includes a fitness center, health-oriented restaurants, walking trails and an integrative medicine center, which provides complementary therapies such as nutrition counseling, fitness instruction, and lifestyle coaching.Retail shops and a women's health center will open in the fall.
Coody-Anders says Resolute Health benefits from "a fairly robust payer market." "Our payer mix is more favorable from a traditional fee-for-service environment than our larger metropolitan neighbors, with better than 33% of our market being managed care, 33% being Medicare, [and] less than 9% Medicaid," she says.
Integrated Data
Resolute Health Hospital's first ER patient this week exemplifies how the hospital will provide care. The woman brought her medical records encrypted on a Resolute Health BeneFIT swipe card.
"As she was arriving by ambulance, because she was a patient of one of our primary care providers in the clinically integrated network and has visited our Resolute Health outpatient urgent care, we were able to pull up her medical record and see her health and medication history before she arrived," Coody-Anders says.
"We were able to swipe her smartcard upon arrival and she was instantly registered and all of the details from the ER were added to her health record. Since she was discharged, a navigator has already called her to set up an appointment to see an educator and members of our integrated care team to continue the process of getting her better and keeping her out of the ER again."
In the coming months, Resolute Health will look to build accountable care organizations with BlueCross BlueShield of Texas and some area employers that want to manage health and wellness for their employees.
How will the organization know if this experiment works?
"We are measuring at the unit level. If it's an enterprise, each of the business units has goals that are created to contribute to the enterprise-wide financial goal that we have," Coody-Anders says. "It will take some time. We are talking about five to seven years to see the kind of EBITDA diversification that comes from being engaged across the continuum."
"The early signs [indicating that] we are successful with this investment will be employer interest in working with us on this, followed by the large payers. We are also launching our own health plans for individuals and small businesses and that will definitely help us to align incentives between our members and the delivery system."
Coody-Anders sees Resolute Health's role as "the innovation lab" for one of the nation's largest for-profit hospital chains.
"We are not betting the company on what happens here," she says. "But we can treat it as a crucible for innovation and see what works and roll it out in other places."
Described as "neither a merger nor an acquisition," the deal between Alexian Brothers Health System and Adventist Health to form a "joint operating company" is intended to reduce overhead and improve economies of scale as they move toward population health models.
Mark A. Frey
President and CEO of Alexian Brothers Health System
Alexian Brothers Health System and Adventist Health System are moving toward a "joint operating company" that that will create an integrated health system in Chicago's northwestern suburbs.
The deal, announced with a letter of intent agreement last week, is expected to be completed by the end of the year. It allows both health systems to keep their religious identities and missions, while integrating operations, reducing overhead, and improving economies of scale as they move toward population health models.
The two health systems say they have signed a letter of intent to move toward the JOC. David L. Crane, president and CEO of Adventist Midwest Health, and Mark A. Frey, president and CEO of Alexian Brothers Health System, were in agreement as they explained the reasons why in a telephone interview with HealthLeaders.
"It is neither a merger nor an acquisition," Frey clarified. "Both of our respective companies will retain our assets and our balance sheets remain intact. Alexian Brothers Health System continues to own and operate its assets and Adventist does the same thing. Our parent corporations will be able to consolidate the earnings. We will share a profit-and-loss statement with our respective organizations. So it is a shared P&L. None the less, both companies will continue to own their assets."
ABHS, part of St. Louis- based Ascension Health, operates five hospitals in the northwestern suburbs. AMH, part of Adventist Health System, operates four hospitals in the area. A definitive agreement between the two systems would have to be cleared by the state of Illinois. Frey and Crane say they anticipate those hurdles to be cleared in the coming months and the deal finalized by the end of the year.
Crane says the JOC came about in response to Chicago's changing healthcare market.
"The truth is that we are both strong organizations but as we looked into the future we recognized that to really be able to do population health well in the accountable care environment we needed scale," Crane says.
David L. Crane
President and CEO of
Adventist Midwest Health
Frey describes ABHS as "a little bit undersized" for Chicago.
"That is not to say we are not a large organization. We are. We have a niche position in the northwest suburbs of Chicago. As you look out over the next five or 10 years you are going to need a much broader network."
The JOC will combine nine hospitals and more than 3,000 physicians now affiliated between the two systems.
"It gives us a geographic footprint almost overnight that really enhances our ability to deliver services across a broader part of the geography in Chicago," Frey says.
Allan Baumgarten, a close observer of the shifting landscape for hospitals and health systems across the Midwest, says the JOC is a good fit for both systems.
"The two systems are very similar and compatible - west suburban geography, generally affluent patient base, similar payer mix, with less than 20% Medicaid patients, both part of strong multi-state, religious networks," Baumgarten said in an email exchange.
"The sum of the parts gives them strength against the Advocate hospitals, which is the largest system in the state, and which has two very strong hospitals on the west side, Lutheran General and Good Samaritan. Based on 2011 net patient revenue numbers, the two combined have about 6.8% of the market, which is well below Advocate (15.3%) but put Alexian-Adventist in the top four."
The following is an edited transcript.
HLM: Why a JOC?
Crane: The structure allows two strong organizations to work together and yet be able to preserve their mission and their ownership of assets. Adventist Health Systems has done this very successfully in Denver for the past 20 years in its partnership with Catholic Health Initiatives. We like it because it's a hybrid that allows us to do business together and collaborate without having to give up legacy assets. Both of us have a proud heritage. We didn't want to give up that identity but we wanted to create something with enough scale that we could do what is required of us going forward.
HLM: How does this work with your parent systems?
Frey: Both of our parent organizations consolidate our financials and roll them up into the national organizations. Both of the national parents will continue to roll up the P&L, and consolidate that on the national P&L, just like they do today.
Adventist has their own balance sheet and we have our own balance sheet.
Were we build something together, say theoretically we build three or four ambulatory care centers, then that would probably go on the balance sheet of the new organization's umbrella company.
But we don't have anything on that balance sheet today. That is not to preclude that from happening in the future.
HLM: How will the JOC change the way you do business?
Crane: The biggest advantages for us is that we will be able to do our clinical integration work together. Even though we both have fairly advanced PHOs and we have a large number of affiliated positions this will double our capabilities. As we make these big investments in technology, whether it is a population health registry, risk systems, the ability to stratify and manage risk in this ACO world, this gives us the opportunity to do that together.
The second thing is we both are larger organizations, but we need to continue to work on that cost curve. There are overhead redundancies that we can eliminate. We want to take advantage of that. We don't think the future is more reimbursements. We think the future is less reimbursements.
HLM: Have you identifies redundancies or other areas that you might cut?
Frey: We do have two complete C-suites and we have two complete sets of infrastructure that support our respective organizations. So, when you think about the clinical delivery system at the local level and the work that is being done at the bedside, I don't think there is going to be significant changes there.
Where we are going to see changes and try to take out redundancies and duplication is more at the executive level and more at the infrastructure and administrative levels where we have two departments of everything, marketing communications, legal.
Crane: Neither one of us wants to impact the clinical care at the bedside. We both have benchmark quality standards that we want to maintain. We are looking at those places where we don't impact patient care but where we can achieve more economy.
Management would be one. All of the overhead kinds of services that we could do together, whether that is centralized billing, or revenue cycle or marketing, when you can spread your costs over nine hospitals instead of four or five it makes us more efficient.
HLM: You have nine hospitals in Chicago between the two systems. Will any of them close?
Frey: I do not anticipate that at all. There is appropriate spread of geography in the different markets. These facilities are positioned extremely well in their respective markets.
Crane: All of our hospitals are in situations where we are doing really quite well. Even though the Chicago market in general has excess capacity nobody that I am aware of in our group of nine facilities is in that kind of immediate jeopardy.
It's true that as acute care continues to change that demand curve is going to change too. But for today, the future looks pretty solid for all of our hospital campuses.
HLM: Will there be conflicts over reproductive health services?
Frey: Because Alexian Brothers Health System is a Catholic healthcare organization, part of Ascension, we are bound by the ethical and religious directives. Adventist has not a completely dissimilar approach. They are able to do some things that we are not able to do. That won't change. To the extent that today they may do sterilization procedures or offer contraception, those particular things that they do today won't change in the future.
HLM: Have you JOC'd yourself out of a job?
Frey: I will be the CEO of the new organization. I am not JOC'd out of a job.
Crane: I am happy to serve as long as I can add value. We recognize that at some point in the future there may be economies that would make us less necessary, and I am speaking for myself. That may happen but that is the last thing I am thinking about.
The founding member hospitals of the National Alliance of Integrated Afib Centers say the top goals of the multidisciplinary, data-driven effort are to stop inappropriate cardiac procedures and to improve the quality of care.
Five heart treatment centers from across the country and a leading atrial fibrillation patient advocacy group for have formed a multidisciplinary alliance to treat people with irregular heartbeats.
The National Alliance of Integrated Afib Centers says there exists little coordination or data sharing about the heart ailment even though by some estimates that 5.1 million people in the United States have a cardiac rhythm disturbance, and that the number could grow to 15.9 million by 2050.
NAIAC President Jonathan Philpott, MD, a cardiothoracic surgeon at Sentara Heart Hospital in Norfolk, VA, says member hospitals will lead the nation in Afib research, foster and refine synergies among cardiac specialties for Afib patients, and parse mountains of specific patient data outcomes with a goal of sharing and standardizing best practices.
"We share a common goal to improve the quality of care with folks who have Afib and to stop inappropriate procedures and go with more effective and more durable procedures," says Philpott, who is himself an Afib patient.
NAIAC will work with StopAfib.org to identify patients and steer them to the nearest member hospital. Each patient will be treated by a cardiothoracic surgeon who works with an electrophysiologist, and a patient care coordinator. The care team and the patient will design the best treatment care plan tailored to the patient's needs.
In a phone interview this week, Philpott spoke in detail about the goals and structure of NAIAC, which is up and running, and what it hopes to achieve. The following is an edited transcript.
HLM: How will NAIAC operate?
JP: The alliance is designed so that patients coming to it are going to see all of their options. When patients come to see a doctor, the doctor typically just talks about what it is they do. My group said this was an old way of thinking.
Let's do this as a heart team, where the patient comes in and you have all the experts there, anesthesia, cardiology, surgery, and let's figure out with everybody looking at the patient what the right thing is, instead of rewarding one group of people for volume.
HLM: Why did you select these five hospitals as founding members?
JP: What we tried to do is look across the country to find an initial group of centers that embraced this idea, but had also shown a good track record with all of the platforms—medical management, catheter ablation, hybrid ablation—and we are also facile with the full Cox maze procedure, which remains the gold standard.
It is interesting that when we started looking across the country there are not a lot that can do all that.
HLM: How exactly are you affiliated?
JP: We share a common goal to improve the quality of care with folks who have Afib and to stop inappropriate procedures and go with more effective and more durable procedures.
HLM: What will NAIAC centers do differently?
JP: We want to be data-driven. To be in the alliance you have to be able to offer those services, but you also have to agree that you will be wide open with your outcomes. To stay in the alliance you have to maintain the capabilities and volume and the ability to do all three of the interventions very well. But you also have to agree to share your data with the data base we are designing especially for the alliance.
The database is unique in that it is going to capture any type of ablation that is performed whether it is catheter or surgical and the follow up is going to be rigid within the first year at three, six, and nine months every year after that.
With all of the centers participating in the same way and following the data we will quickly be able to perform very fast quality improvement, not only amongst the centers but within each center.
HLM: Why does Afib need centers of excellence?
JP: I can tell you exactly right now what my coronary mortality rate is and so can any other surgeon who is worth their salt in the United States because it is tracked daily. If you look at transplants it's the same thing. You get to Afib and it's kind of like [you hear] crickets.
I want these centers to start off and say we are going to be data-driven and we are going to start shifting care to models that work and also save institutions down the road.
The old way was if a guy had a catheter ablation that failed he got rewarded and so did the institution. The patient would come back and have another catheter ablation and if that didn't work they still got rewarded for failure.
I see the future as teams being rewarded for quality. Maybe fewer procedures, but the ones that are performed are the ones that work.
The other part of the database I am most excited about is tracking readmissions. Afib readmissions are very common and super expensive. We have already seen here that the folks who got ablated up front cost a little bit more, in those cases, once we did it they quit coming back.
We wanted to build that into the database. Are we saving money over time by doing a higher quality ablation up front instead of multiple low quality ablations? That is going to be tracked. Overall costs, readmissions, the number of readmissions from complications from Afibs. For hospital administrators that is going to be fantastic data.
HLM: How do you determine who your patients will be?
JP: There is this big section of the population with Afib that have been treated once or twice, but they are highly dissatisfied and they don't know who to go to. That is the target group. We are looking for patients who are seeking education about an honest appraisal of where they are with their Afib and what their options may or may not be.
So, we set the whole thing up, we partnered with stopafib.org, which is also very motivated by the fact that there is this gigantic population of folks across the country with Afib who feel like they aren't getting the answers they need.
They developed a website that is the go to site for people with Afib. The whole idea is that if a new patient has Afib they would probably land on this site and it would link them to NAIAC and that would funnel them to one of the centers near them.
HLM: Do you expect more hospitals to join NAIAC?
JP: Absolutely. We wanted to work the kinks out in the first year, but next year we are going to start taking applications. We are already getting requests from multiple hospitals to join. The goal for us though is we can never let this turn into a marketing scheme.
It has to be a quality driven alliance. It is probably going to become an international site very quickly and in the next five years we would like to move to 30 sites minimum. But I don't want to turn it into 100-site thing. I'd rather it stick to maybe 20 or 30 sites across the country that are actually the real deal.
On the financial part, we probably just to keep the alliance growing are almost certainly going to have to demand dues from members. We talked about that but we haven't enacted it. That is probably going to start. The database is going to need a little bit of money but the participating institutions will pay a fee to use that.
A nonprofit health system has developed a nonprofit subsidiary to challenge well-established, well-run, for-profit players for a piece of the hyper-competitive $60 billion weight-loss industry.
In September 2012 I wrote a column addressing a report that showed that obesity is particularly rampant in rural America, afflicting an estimated 40% of the population. I suggested then that it was time for healthcare providers and nontraditional sources to take up proactive measures to address the epidemic.
In October 2012 the nation's largest nonprofit rural healthcare system launched the first of its Profile by Sanford weight loss clinics in Sioux Falls, SD. Since then clinics have opened in Minnesota and the Dakotas and this week Profile by Sanford opens its ninth "retail" weight loss center in Brookings, SD, a town of about 23,000 souls located 190 miles due east of Pierre.
Nate Malloy, COO at Profile by Sanford, says the health system hopes to have about 30 locations operational by this time next year and "100+ locations operating in most of the United States" within the next three to five years.
Profile by Sanford is not particularly innovative, and that is not a bad thing. The program uses a combination of well-established practices that other weight loss programs have been using successfully for years, such as face-to-face individualized meetings with coaches to set and keep weight loss goals, meal plans, and using wireless technology to monitor progress.
"We focus on three core areas; nutrition, activity and lifestyle," Malloy says. "Every member that comes into the program receives an individualized plan with each of those core areas."
While the weight loss product itself is tried and tested, Profile by Sanford represents a new dynamic in healthcare. Every day new players from non-healthcare backgrounds enter the nearly $3 trillion healthcare sector to tap into services that for decades have been the domain of traditional providers such as hospitals and physicians.
Private equity firms are buying hospitals. Drugstore-based walk-in clinics are sprouting like mushrooms. This churn is good. It shakes complacent traditional providers and forces them to reevaluate how they deliver care and how much they charge.
Profile by Sanford turns that model on its ear. A nonprofit health system has developed a nonprofit subsidiary to challenge well-established, well-run, for-profit players for a piece of the hyper-competitive$60 billion weight-loss industry.
This is a great idea on many levels.
First, we know that overweight and obesity are still particularly acute in rural areas, and the associated health problems are well known. Sanford Health is the nation's largest rural healthcare system, and it sees and treats the dire consequences first hand. Developing weight loss programs are a logical response born from experience.
Second, as we move toward population health and value-based care, health systems will have a vested interest in making sure the people they serve are eating properly and exercising sufficiently to proactively mitigate obesity-related illnesses.
Third, a successful weight-loss program is an excellent way to build brand value and customer loyalty. There are few things more personal and challenging that trying to lose weight. It is something that most people in this country confront in their lives. Clients of Profiles by Sanford who embrace a structured weight-loss regimen likely will succeed, and they will remember the people who helped transform their lives.
Fourth, weight loss clinics provide an excellent route for traditional providers to enter retail healthcare. These store-front operations do not require a lot of capital investment or high-salaried personnel. And they provide a great way for traditional providers to promote their brand beyond the walls of the hospitals.
Sanford Plays up Retail Angle
"We have taken an approach that I would call a combination of retail in a clinical setting," Malloy says. "We are locating mostly in more retail environments, primarily neighborhood-type settings near the grocery store, those types of locations. Part of it is convenient access for our members. Not everybody wants to go into a hospital or clinic for all services."
Malloy was quick to provide price points. There is a $300 annual membership fee, and new members are given a scale that measures weight, body fat percentage, bone density, and hydration. The "meal replacement products" cost $40 to $80 a week.
That sounds a bit pricey in a town such as Brookings, SD, where the median annual householdincome is about $41,500. Malloy contends it's a good value. "We believe this is something that will do well in a community like Brookings," he says. "There are some interesting statistics on the average American diet and how much people spend each week and our costs are very much in line with that."
No health plans cover Profiles. However, Malloy says the annual membership fee is cut in half if clients are referred by physicians. In addition, Profiles cultivates employer partner programs that allow employees to purchase meal replacement products at a 20% discount. "The majority of our members are activated through employer partner programs," Malloy says.
As Profiles nears its second anniversary, Malloy says it's able to measure success.
"We have been operating a little more than 18 months and we've grown from 50 members at that time to more than 5,000 members now," Malloy says. "We are seeing a lot of members stick with the program not just for one year but to stay engage in a second year after they'd lost the weight in what we call our sustained phase. We are seeing over 33% of our members renewed for an additional year to stay with the program which I think is great."
The capitated Regional Care Organization model is designed to be responsible for all aspects of care for Medicaid recipients in 10 counties in northern Alabama. CMS approval is pending.
Huntsville Hospital Health System and Sentara Health Plans have formed a joint venture to manage a Regional Care Organization that will serve more than 120,000 Medicaid recipients in northern Alabama when it opens next year.
The capitated RCO model was approved last year by the Alabama Legislature, which created five RCO regions across the state to become operational in October, 2016. The plan has yet to gain a waiver from the federal Centers for Medicare & Medicaid Services, however.
That potential iceberg has not stopped HHHS and Norfolk, VA-based Sentara from sailing ahead to create Alabama's first not-for-profit RCO, which should be operational by October, 2015, one year ahead of the state mandate.
David Spillers, CEO of HHHS, says he's not particularly stressed about riding the leading edge of a profound change in the way care is delivered, even as the details have yet to be finalized.
"Hospital systems like ours have to go out and get into the population health management arena. Either we jump out there and do it, or the state is just going to bring in some commercial managed care company to do it to us," Spillers said in a telephone interview.
"I'm not so sure that is worse than taking the risks we are. In fact I'm convinced it's better to take the risk we are than to just let somebody else come in and continue to take patients out of our hospitals and not have any opportunities on the other side to make that up."
The HHHS/Sentara RCO will be responsible for all aspects of care for Medicaid recipients in 10 counties in northern Alabama. The new company will be headquartered in the Huntsville area and is expected to create about 400 new jobs in Alabama and Virginia.
Sentara Health Plans President Michael M. Dudley says his company and HHHS anticipate a 50-50 risk sharing arrangement under the RCO.
"This is not new business to us. We've been in this business for 30 years and more specifically, Medicaid managed care for about 20 years here in Virginia," Dudley said in a telephone interview. "We serve about 170,000 members all over Virginia. We are a statewide provider of Medicaid services in Virginia and have a pretty good track record of serving this population."
"We see it as a great opportunity to scale up a business line that we have done very well with in Virginia and we think we have a lot to offer the good folks of Alabama as they are moving into more of an accountable care scenario with how they deliver services to Medicaid populations."
Dudley acknowledged that the waiver for the program has yet to be approved, "but if we waited until the waiver was granted it would be way too late to implement on schedule that we now have for October 2015. So, we are beginning to make plans for implementation. We are working well with our partners in Alabama and we expect the waiver will be granted in the next few months and everything will fall into place."
Spillers says HHHS wanted a partner with the expertise in managing Medicaid populations and who was willing to share the risk under the capitated model for the population they're serving.
"We felt like if they had skin in the game they're more likely to make sure we are successful," he says. "If you are just providing services and you are going to make your money regardless of what happens to us that is not a partnership as far as I am concerned."
Spillers says HHHS wanted a partner with the expertise in managing Medicaid populations and who was willing to share the risk under the capitated model for the population they're serving.
"We felt like if they had skin in the game they're more likely to make sure we are successful," he says. "If you are just providing services and you are going to make your money regardless of what happens to us that is not a partnership as far as I am concerned."
Spillers says being on the leading edge of the RCO movement carries risks and rewards.
"If we didn't have an experienced partner like Sentara I'd be running from this instead of to it," Spillers says. "The state was excited about us coming up first because they want to see it work before they expand it. It's better for them. It also gives us the opportunity to go into other regions if other regions want to partner with us and not have to bring up multiple regions at one time."
Dudley agrees.
"Any time you are the first to the market you are taking some risks that others maybe want to lay back and see about," he says. "On the other hand, given that we have 20 years of experience here in Virginia, we really know this business. We know what we are getting into. We will be able to see very rapidly if the business is going to be sustainable down there."
"We expect that the state of Alabama will be reimbursing at levels that will be sustainable. But if we get six months into this, eight months into this, and the state is not able to offer reimbursement at a rate that is sustainable, then we will have to rethink this whole thing, but we don't expect that at this point."
OH State's Wexner Medical Ctr. Enters Affiliation The Ohio State University Wexner Medical Center and Ohio Valley Health Services and Education Corp. are creating an affiliation that will serve the Ohio Valley region, the two health systems have announced jointly.
Ohio Valley Health Services & Education Corp. is the parent company of Ohio Valley Medical Center in Wheeling, WV, and East Ohio Regional Hospital in Martins Ferry, OH.
"We're excited that this affiliation will expand access to specialized medical care for many more people in our region," Steven G. Gabbe, MD, senior vice president of Health Sciences and CEO of Ohio State's Wexner Medical Center, said in prepared remarks. "We also see many opportunities to increase medical education and clinical research in the area, and to help OVMC/EORH create innovative health solutions for the community."
Under the affiliation, the two health systems will remain independent, but work together to develop close-to-home care options for residents who would normally travel to Ohio State for highly-specialized treatments. Collaborations in areas such as cancer, heart and vascular care, neurosurgery, telemedicine, urology, diabetes management and community wellness/prevention programs are being discussed.
The two systems will also explore other opportunities, such as adding OVMC and EORH as clinical rotation sites for some of Ohio State's College of Medicine students, and expanding patient access to clinical trials, the systems said in a joint media release.
"We're proud to bring advanced, specialized care from a nationally ranked academic medical center to our patients and to serve a critical need in the Ohio Valley," Michael J. Caruso, president/CEO of OVHS&E, said in a media release. "Additionally, by working with Ohio State, we'll achieve greater efficiencies, lower costs and build a stronger community hospital system through shared electronic health records, group purchasing programs and other shared services."
Ohio State's Wexner Medical Center and OVMC/EORH will form an affiliation advisory council that will set the overall strategic goals, facilitate the plans and identify opportunities for both hospital systems.
Spillers says HHHS wanted a partner with the expertise in managing Medicaid populations and who was willing to share the risk under the capitated model for the population they're serving.
"We felt like if they had skin in the game they're more likely to make sure we are successful," he says. "If you are just providing services and you are going to make your money regardless of what happens to us that is not a partnership as far as I am concerned."
On Monday, the state's new Rural Hospital Stabilization Committee sat for nearly three hours at its inaugural meeting to discuss ways to keep more rural hospitals from shuttering.
The 15-member committee was created in March by Republican Gov. Nathan Deal. It's comprised of politicians, hospital administrators, rural health advocates, physicians, and other healthcare experts and concerned citizens. Leading the agenda on Monday was Deal's three-point plan which includes allowing financially strapped rural hospitals to transform into freestanding emergency departments.
Palpably absent, however, was any discussion of expanding the Medicaid rolls in Georgia and tapping the billions of dollars in federal money that come with it.
The people appointed to the committee appear to be honest and conscientious and to truly care about the perilous state of rural hospitals in their state. They seem to want to find a solution, but they are severely constrained, and they know better than to carp about a Medicaid expansion that is not going to happen.
Unfortunately, when the single most important, immediate, and glaringly obvious component of any effort to help rural providers is taken off the table, it becomes hard not to dismiss this project as an election year stunt to provide political cover for Deal, who has been heavily criticized for his decision to forego the federal money.
Neal has said Georgia cannot afford to expand its Medicaid rolls, which he says would cost the state about $4.5 billion over the next decade. He has also suggested that the federal government might at some point change the terms of the deal, and force states to shoulder more of the cost.
Other studies suggest that the state cannot afford to reject the expansion money. By some estimates, the state's healthcare providers contend with about $2.8 billion a year in uncompensated care. A Kaiser Family Foundation report estimated that accepting Medicaid expansion money would cost Georgia about $2.5 billion over the next decade.
That state money, however, would bring down about $33 billion in federal matching funds, and it would reduce the uncompensated care bill in the state by $700 million.
The governor's refusal to expand Medicaid also undermines his efforts to loosen state licensure restrictions and allow some hospitals to strip down and become freestanding emergency departments, which is actually an intriguing idea.
Like everything else in healthcare, the devil will be in the details. But providing triage in remote areas that otherwise cannot support even a critical access hospital makes sense and it is worth considering. However, it's not clear how much that transition would cost, or who would pay for it now that Medicaid expansion money is off the table.
Bill Custer, a professor at the Institute for Health Administration at Georgia State University, says the panel's task must be placed in context. "Given the constraints that they are not going to expand Medicaid, then trying to organize the care delivery system in rural areas to be more sufficient makes a lot of sense," he says.
"Where we are seeing a lot of irony is that the resources to help these rural areas would be more readily available if the state expanded Medicaid. The investment by the state to bring more healthcare dollars to rural areas would have been small relative to the benefit to those areas."
Rural providers aren't the only people harmed by the governor's refusal to expand Medicaid. The cost of uncompensated care that would have been reduced will instead be picked up through cost shifting.
"Healthcare is an integrated system and financing goes across the system," Custer says. "Without these resources people buying private coverage are paying more than they would if they expanded Medicaid. People are having to travel farther to get care, regardless of how they are paying for that care. So it's not just affecting the lower incomes, it's affecting all Georgians."
If Deal placed the welfare of rural hospitals and the people they serve above partisan politics, his efforts to stabilize providers would include pressing his party to accept the Medicaid expansion money.
That money by itself will not solve every problem. Without additional funding, however, rural hospitals will close or restrict services, access to healthcare will worsen, and people will die.
In an exclusive partnership deal, Akron General Health System will retain majority ownership and there will be no attempt to impose Cleveland Clinic's employed physician model on private practices affiliated with Akron General.
Cleveland Clinic will become a minority owner of Akron General Health System, making two health systems exclusive partners in the highly competitive Summit County Ohio market.
Thomas L. "Tim" Stover, MD, MBA, president/CEO, Akron General Health System, declined to detail the financial terms of the deal, which includes a "substantial" investment by the Clinic. Nor could he provide a specific breakdown of the Clinic's minority ownership.
"Frankly we don't know yet," Stover said in a telephone interview Tuesday. "We have to do an evaluation of our entire system and then we are going to back into the percentage. But it will be significantly less than 50%."
Stover says it was important for Akron General to retain majority ownership of the health system because "first of all we want to make sure that this thing works."
It was also a question of local control.
"Even though we are only 25 minutes away from Cleveland, Akron, OH is Akron, OH. People want to get their care here," Stover said.
"I have always looked at The Clinic as an asset and not a competitor. They take care of the sickest of the sick. It's great to have that resource this close. But on the other hand, for what most people want taken care of, we have it here at Akron General. It is a good way to start. Both of us have the idea that as time goes on there will be a bigger relationship coming down the road. But both of us are comfortable with this position at the beginning."
Ann Huston, chief strategy officer at Cleveland Clinic, says the deal is expected to be finalized within the next two months.
"We are driving hard over the next several weeks to get our definitive agreement architected," Huston said in a telephone interview Tuesday. "One of the things we did at the beginning our discussions was talk very specifically about what was important to each organization and what the objectives of this relationship would be. And one of those very clear objectives was to continue to have strong Akron-based leadership of Akron General Health System. That had a lot to do with how we crafted the arrangement."
Hospital sector analyst Allan Baumgarten said in an email exchange Tuesday that the deal makes sense for both health systems fighting for a leg up against strong competition in the hotly contested Akron market.
"In short you have Catholic Health Partners buying a share of the Summa Health, the other Akron system and Akron General needing capital and care management help," Baumgarten says. "Cleveland Clinic has wanted a presence in Summit County for a long time. University Hospital already is there and would probably do something with Akron General in the Clinic didn't get there first."
Although Akron General is a fairly large healthcare system, Stover says it had to be bigger in the Akron market.
"Northeast Ohio is heavily managed as far as managed care is concerned and we have a competitor in town (Summa Health) with their own insurance company," he says. "It's difficult for us to do population health without a partner that can have some influence on a payer."
"Not only that, but the market has completely changed. The majority of the competition that Cleveland Clinic looked at when they were talking about Cuyahoga County was University Hospital. University Hospital has made significant inroads to Summit County. They've bought 16 of our primary care physicians."
"Remember, about 65% of the Clinic's revenues come from eight surrounding counties and we are one of them. They can't afford to lose this market in Summit County, No. 1. And UH is here and they have to compete against them."
Huston says Cleveland Clinic already sees many patients from Akron, which is only 35 miles away. "When we think about our service area, Akron is just core to our service area," she says. "It is a very natural relationship for us to have, to formalize it and continue to grow services, programs, access in that market together."
Both health systems played up the opportunity for physicians in Akron to participate in Cleveland Clinic's Quality Alliance, which fosters collaboration between independent and employed physicians to improve quality of care, reduce costs and increase efficiency, and provide access to expertise, data and experience.
However, Stover says there will be no attempt to impose Cleveland Clinic's employed physician model on private practices affiliated with Akron General.
"Most of our compensation models are revenue minus expense, pretty similar to what we did in private practice," he says.
"The Clinic has learned that they can't push their physician model on an independent private practice facility or community. They are not demanding that our docs become a part of their model. They are very aware of the environment they are coming into. They don't want to change that culture. They want to enhance it. We are going to have multiple different models as far as physician alignment is concerned. It's not an issue for us."
In a separate announcement this week, Cleveland Clinic said it has formed a joint venture with Select Medical to provide inpatient rehabilitation services in Northeast Ohio.
Under the deal, the two organizations will expand these services on Cleveland's West Side by building a new 60-bed adult inpatient rehabilitation hospital in Avon, OH.
The two organizations have also entered into a management agreement, effective Aug. 1, 2014, to enhance operations in existing Cleveland Clinic rehabilitation facilities. The deal will create a residency program for physicians in physical medicine and rehabilitation.
